One of our facilities has been utilizing a 3rd party product to manage their raw material inventory, and over the years what is in Epicor is far from accurate compared to the 3rd party product, and what we actually have on hand. So, they are going to drop the 3rd party software and start using Epicor for the Inventory Management.
They want to ‘start fresh’ in regards to their Raw Material inventory. They are going to go through and do a physical inventory of everything they have in the facility for Raw Materials, and record the relevant information such as Material/PartNum, ContainerID, (which is going to be used as the LotNum moving forward), BinNum, Weight, etc. They are then going to want that data loaded into the system via DMT.
In this process, all of their existing Lot Numbers will be replaced with the ContainerID that each Raw Material has (each ContainerID is unique). We do not use Lot Numbers for anything other than inventory tracking, so this shouldn’t be too big of an issue since our inventory is already wrong.
My question is this: What is the best way to go about this? I was thinking of a DMT to zero out the quantity for Raw Material that is currently in the system, then another DMT that has the corrected quantities along with the new Lot Numbers. It looks like the Quantity Adjustment DMT would suffice for this.
Is this thought process accurate? Does anyone have alternate ideas with how to go about doing this?
How is their current inventory currently valued? Is Epicor’s GL value for Inventory only what is in Epicor, or do they manually update it periodically?
If they will also use Epicor for costing, then I’d recommend using the Full Physical Inventory functionality that’s built-in, as that will account for (pun intended) both the quantity and valuation… provided your enter Cost Adjustment data as well.
I think your method is fine… but watch out on the financial side.
Make sure you have “costs” recorded for the parts you’re adjusting out and they correspond to what you’re adjusting back in… with any additions/subtractions, etc.
Not sure of your costing method… just wanted to bring that up. We use FIFO, so for us, when we “started fresh” at Go-Live for example, we had to do a quantity adjustment (to create the FIFO layer) and then a corresponding cost adjustment to apply costs to the created layer.
I would certainly do this in a test environment first and make sure everything works out the way you expect.
I talked to our CFO guy (who is involved in this process) and he stated that we are using Standard costing, indicating that Part XYZ Lot 123 costs the same as Part XYZ Lot 321 in our system, regardless of the vendor. He said that since we are basically zeroing out quantities and adding in new quantities, that his numbers will be fine. They are expecting major discrepancies with what the system currently shows vs what it is going to reflect when all is said and done.
All of that finance stuff is way above my head, so I am having to rely on his word that he has put the thought into this that is needed. I am the tech guy that just makes things happen
Oh, we will be doing this in our test environment multiple times prior to live, but good looking out
I’m on the Operations side too, but I don’t get to just ignore the Finance piece (darn).
Probably the best way to approach this would be:
Remove all existing inventory from Epicor, and zero out the on-the-shelf Inventory GL balance (leave the WIP balance where it is).
Make sure the PartBin table shows no quantities in ANY bins (if there are exceptions, make sure you note them, as they may affect your GL later on)
Using the Cost Adjustment DMT, enter your Standard Cost values for ALL part numbers (“all” is a very important word here)
Use the Epicor Full Physical Inventory process to count and populate your inventory and GL.
You CAN just use the DMT Quantity Adjustment template to upload your counts, but here are two reasons to use Full Physical:
Your inventory valuation is going to change. I guarantee it. Wouldn’t it be nice to have all the documentation and process that an accepted Inventory Count was followed?
You’re probably going to use this functionality in the future. Good habit to be in.
I assume you mean just the existing raw inventory, right? If the “regular” (finished products) inventory is OK on the quantity and cost side…should be safe to skip. We’re lucky in that our raw components are in a separate MFG warehouse…so we’d be able to narrowcast our efforts. Cost Adjustment DMT might be the most critical piece of the puzzle…to insure Kinetic costs match up clean to those existing in your 3P system or to allow cost corrections with visibility/tracking.
In the VAST MAJORITY of cases of this type, the inventory number ends up changing dramatically. The more organized documentation you have on why this occurred goes a LOOOOOOONG way to make that conversation easier with those who will ask why (read: auditors and/or tax examiners).
Oh, Cycle Count…yeah, we’ve got that and our ops team uses it regularly. I was searching for “Full Physical”. All good. And you’re dead on with the organized documentation and auditors. Even though we’re on Kinetic and not E10, we still had to go through similar hoops as part of our go-live in 2023…
If your systems and procedures are solid to begin with, doing a full physical should be a walk in the park. Boring and tedious, perhaps…much like everything associated with an audit…but nothing compares to the dread of inaccurate counts, poor fillrates and unhappy customers.
